California Employees Misclassified as Independent Contractors

Many employers try to misclassify employees as independent contractors in an effort to reduce costs associated with workers’ compensation insurance and other workplace benefits. This type of misclassification can have a profound negative impact on the rights of workers. Overtime pay may be unavailable, the misclassified worker will pay more in taxes and a host of other employment terms could be worse for a worker who is misclassified.

In one recent case, the Ninth Circuit ruled that California home delivery drivers were misclassified as independent contractors. A variety of factors were considered before the court decided that the independent “businesses” the employees were essentially forced to form were businesses in name only.

If you suspect you have been misclassified as an independent contractor, you should speak with an experienced California employment law attorney.

Employees Misclassified as Independent Contractors

From November 2003 to October 2004, one employee worked as a truck driver for a Georgia-based company called Affinity. His job was to provide home delivery services for Sears Holding Corp. A manager for Affinity told the employee that he would need to become an independent contractor with both a commercial checking account and a business license in order to do the delivery job. This was the company policy for drivers. Mr. Ruiz happened to live in Southern California when he took the job.

Despite the fact that the delivery drivers were supposed to have independent businesses, they were encouraged to rent trucks from Affinity at a cost of $350 each week. This was deducted from paychecks the drivers received. Drivers were also required to attend a morning staff meeting daily and to wear uniforms that the company specified. These factors made the drivers much more like employees under California’s labor laws than independent contractors.

The employee filed a class action lawsuit in U.S. District Court in San Diego in 2005 against Affinity. He alleged that the drivers have been improperly classified and thus had been deprived of vacation pay, overtime pay, sick days, severance wages and holiday pay. He also indicated that workers’ compensation premiums were improperly deducted from the drivers’ pay because Affinity should have been responsible for paying premiums but instead the company required individual employees to carry coverage.

While the U.S. District Court initially ruled that the drivers were properly classified as independent contractors, Mr. Ruiz appealed and the Ninth Circuit decided in his favor. The decision was unanimous and was based on the fact that Affinity largely had control over the workers, including controlling the details of their routes, equipment and the appearance of the driver. Other factors that were considered in deciding the employees had been improperly classified included the fact that the drivers received a regular set pay rate and the fact that the company had the right to fire drivers.

This case is one of many examples of misclassified employees taking legal action to be declared the employees that they actually were all along.

Employment lawsuits can be filed with assistance from the Nassiri Law Group, practicing in Los Angeles, Riverside, and Orange County. Call 714-937-2020.